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Anthony Zammitt

What is Considered Taxable When You Own Rental Properties

What is Considered Taxable When You Own Rental Properties?

By | Property Management

If you’re considering getting into investing in rental property, one thing to consider—beyond all of the additional responsibilities you’ll take on by doing so—is how owning investment property in Chicago will affect your taxes. When you rent out apartments, condos, or houses, your taxes can become complicated. Repairs and upgrades may or may not be deductible, and any money you make on rent will need to be claimed on your taxes. Beyond that, what should you know about how owning investment properties affects your taxes? As a property management company in Chicago, we at Lofty do our best to help our clients succeed with their investments, and part of that means making sure they understand how investing in property will alter the way they do their taxes. This guide will help you prepare yourself for what’s to come when you start working with property investments.

Deep clean

Starting with the outside, remember the importance of curb appeal when your house goes on the market. It’s the first impression your potential buyers will have and the last thing they will see as they leave. Replace worn out welcome mats and sweep debris from the porch and driveway, when possible. Minimal landscaping with bushes and flowers can add a colorful fresh touch to any front yard. Think of your yard as a free advertising platform. Create a landscape that can bring positive attention and lure prospects inside.

A deep cleaning of the inside is also necessary in order to show off the best features of the interior and make prospects feel comfortable.

What is Considered Taxable When You Own Rental Properties

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Is Everything You Collect from Tenants Taxable?

Not quite. Yes, rental income is taxable, but you’re allowed to reduce your rental income reporting by subtracting expenses that you incur from preparing your property for rental, as well as maintaining it. You’ll report the income as you would any other income—for instance, any rent you collect during 2016 would be claimed on your 2016 taxes. Even if you receive a check for January 2017 in December 2016, you would still claim it for 2016 earnings. If you receive a deposit for first and last month’s rent, it’ll be taxed in the same year, not as separate income in different years.

Security deposits, however, are not included in your taxable income, since you’ll be (theoretically) returning them to your tenants at the end of their lease. If the deposit is merely “last month’s rent,” it’s taxable since it’s just advance rent, but security deposits that are returned aren’t considered taxable income. If, at the end of a tenant’s lease, you keep (any or all of) their security deposit, you will then have to count it as taxable income.

What Expenses Can Be Deducted from Rental Income?

Luckily for investment property owners in Chicago, there are a number of deductible expenses that can save you money when it comes time to pay the tax man. Expenses such as advertising the unit, cleaning and maintenance, homeowner association dues/condo fees, insurance premiums, local property taxes, pest control, trash removal fees, repairs, utilities, and more are all counted as deductible expenses on investment properties. To learn more about all of the eligible deductions, it can be helpful to work with a professional CPA.

What If Your Property is Sometimes Owner-Occupied?

If you own a vacation home that you rent out for part of the year, you should be aware that, in order to deduct losses on the property, you can’t use the property for more than 14 days or 10 percent of the days the unit is rented during the year, whichever is greater. This also applies to a piece of property, say, a house, that you bought and lived in for a few years before renting out—if you still plan on occupying it for part of the year, you’ll need to work with your account to figure out exactly how your taxes will be calculated.

How Do I Report Rental Income and Activity on My Tax Return?

As an individual, you’ll have to report the rental income as, well, rental income. However, you don’t have to do it on your personal taxes. Most landlords establish LLCs, or limited liability companies, for their rental properties. LLCs offer liability protection so that you can keep your personal and business assets separated.  This way, only that bank account, or that LLC, is liable for debts associated with the property. This is beneficial because then, your personal finances won’t be affected by problems with your rentals. LLCs also offer tax benefits, by allowing you to pass tax consequences of your rental properties on to your personal taxes—in other words, you won’t have to deal with corporate ownership taxation. Your personal finances will be safe, and you won’t be double-taxed on your properties.

Need Help With Your Rental Properties?

Getting help with the transition into investment property ownership is something a lot of people seek out, and for good reason. Going it alone can be stressful and frustrating, and it can be beneficial to have someone on your side to explain the various processes of investing in property. At Lofty, we understand the intricacies and difficulties that new landlords face when they get started with rental properties. Our goal is to make your life easier—to help you sort through all of the responsibilities so that you can live the life you deserve, rather than spending countless hours on paperwork, apartment maintenance, and other busy work. If you need help with getting started on owning Chicago investment property, or you have questions about how getting started with investing will change your taxes, feel free to contact us anytime—we’re here to help!

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5 Key Things to Add to a Lease that Many New Landlords Forget

5 Key Things to Add to a Lease that Many New Landlords Forget

By | Property Management

If you’re new to the investment property game in Chicago, you’ve potentially created your apartment leases based on a few different ones you saw online or signed yourself when you were a tenant. Times change, though, and it’s important to craft lease agreements that are tailored specifically to your units as well as the most common issues that arise in the city you own investment property in. A lot of new landlords tend not to customize their leases, which can lead to problems. As a property management company in Chicago, we at Lofty understand what loopholes and gaps in lease agreements can hurt landlords and property owners, and we work to ensure that our clients are protected. When you write up your leases for your tenants, be sure to include these five key points to make sure everything is covered.

1) Who’s Responsible for Rent in Multiple-Tenant Units

If you rent units that are multiple bedrooms, be sure to put clauses in the lease that dictate that even if one person moves out, the total amount of rent will still be due. One common mistake that new landlords make is forgetting to add these clauses. This can cause problems and arguments with confused tenants, who were under the impression that if one person moves out, the remaining tenants will only be responsible for their portion. Of course, this leaves the landlord in a jam and can cause a loss of profit, so it’s essential to put a stipulation detailing how if someone moves out, the remaining tenants will still be required to cover the rest.

5 Key Things to Add to a Lease that Many New Landlords Forget

2) Clear Terms of When the Lease Starts and Ends

Some landlords forget that when they write out a lease, they will need to write in exactly when it starts and exactly when it ends. Without specific dates, a tenant may try to argue that their lease started later and therefore will end later—this can cause a landlord to run into problems stemming from showing the apartment and signing a new tenant to lease it, only to learn that the current tenant has no intention of leaving. If this happens, the landlord may be at the mercy of common law, which, at least in Chicago, tends to favor tenants. Be sure to include the specific start and end dates of your leases so that tenants don’t try to overstay their welcome or dodge rent increases.

3) What Repairs the Landlord and Tenant are Responsible For

Some tenants think that their landlords are responsible for every little repair, down to replacing burned out lightbulbs. If you want to avoid fielding phone calls about things like that, make sure that you dictate what you are responsible for and what your tenant is responsible for. Some landlords will put in a stipulation of a dollar amount—for instance, the landlord is responsible for any repairs that cost more than $25—while others simply suggest calling the property manager to discuss any maintenance issues. Whatever your preference is, make sure that your lease tells your tenants exactly how to manage any problems they have with the property.

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4) Limits on Occupancy and Subletting Rules

In the current age of short-term rental sites offering housing for vacationers in popular cities, the convenience for travelers can turn out to be a nightmare for landlords. Because these short term renters from sites like Airbnb are not background checked, it can open your tenants and your property up to vulnerabilities and damage. Be sure to write into your lease whether you will allow situations like this to happen, and if not, be sure to outline what will happen with tenants who violate the terms.

Be sure to outline who is allowed to stay in the unit, as well. Some problems arise when a tenant has someone come live with them off-lease, and then the new unauthorized “tenant” causes trouble or damages the apartment. Without regulations about who is allowed in your rental properties, the cost for solving these problems can come back to you. When you outline who can live on the premises, however, the tenant is then responsible for any issues their guests cause.

5) Illegal Activity and Eviction Grounds

Finally, many new landlords forget to put in their lease what will happen in the event of a tenant being found to be participating in illegal activity. Some tenants think that because it’s “their” space, it doesn’t matter what they do, so long as they do so indoors. However, this is not the case. If you find yourself needing to deal with a tenant who is breaking the law by, say, doing drugs in their apartment, it is much easier to do so by presenting evidence that they’re not just breaking the law, but that they’re breaking the terms of their lease and as such are voiding the validity of their rental contract.

Include outlines of what will cause tenants to be evicted, as well. This can help prevent any surprises to tenants and can help minimize conflict.

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Need Help Drafting Your Rental Agreements?

If you’re struggling with your investment properties and need help putting together a complete rental agreement that covers all of your bases, working with a property management company in Chicago can be extremely beneficial. At Lofty, we’re dedicated to working with all of our clients so that they don’t have a schedule full of busy work. We want people to enjoy owning investment properties–as such, we take care of everything from leases to maintenance to move-ins/move-outs, and everything in between, so that you can live the life you deserve. Find out more about what we do to make Chicago investment property owners’ lives easier—call us today.

Wondering if a switch might be right for you? Give us a shout and learn more.

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What to Do When a Tenant Leaves Your Property Severely Damaged or Destroyed

What to Do When a Tenant Leaves Your Property Severely Damaged or Destroyed

By | Property Management

It’s the part about owning investment properties and being a landlord that people dread the most—walking into a unit that someone just vacated to find it in complete and utter disrepair. Whether you were dealing with evicting a tenant or were simply renting to someone who had no regard for property that didn’t belong to them, you’ve got a mess on your hands. More irritating than that, you know that the security deposit—if there was one—isn’t going to cover everything. When a tenant smashes windows, punches holes into walls, rips up carpet, burns or stains wood floors, cracks tiles, etc., the cost to fix everything can add up unbelievably quickly. Being on the hook for the expenses isn’t fair, but if a tenant didn’t care about trashing the place, they’re probably not going to willingly offer up the cash to fix it. So what do you do?

First Things First: Document Everything and Contact Police

Take pictures and video of everything that’s been damaged. Make sure you’ve got everything—for safe measures, it can be a good idea to simply photograph the entire unit. Make sure that the photos you take are timestamped with the day and time. This can help you if you need to go to court over the damages. File a police report about the damages. This gets the paper trail started, and may even make things easier, if you can use police help to find out where the tenant’s new address is for legal proceedings.

You’ll also want to contact your insurance company and your property management company, if you have one. Like contacting the police, this starts the process of getting things started so that you can be reimbursed one way or another. Your property manager can, at the very least, take note of who the tenant is that did this, so that if you’re ever called upon for a reference, you know what to do.

What to Do When a Tenant Leaves Your Property Severely Damaged or Destroyed

Gather Bids for Repairs

Once you’ve determined all that needs to be taken care of, start contacting contractors to help you put the pieces back together. Keep copies of the bids, and proceed quickly so that you don’t lose money from having your unit vacant and unrented.  Your property management company can provide you with a list of reputable contractors. You can work on seeking restitution later on—right now, the most important thing to do is get your Chicago investment property back to its original condition. The sooner you can do this, the sooner you can start renting your properties out and earning money. Shelling out cash to fix damage someone else caused is not anyone’s idea of fun, but in the grand scheme of owning investment properties, moving past your frustration is the fastest way to get back to turning a profit. Once your properties are back in working order, then you can worry about getting reimbursed for them one way or another.

Use Security Deposit Money

Use the security deposit money to cover the repairs. Of course, if your tenant left the place destroyed, it’s likely going to cost more than their security deposit can cover. Even though your expenses will outweigh the amount of money in the deposit, you’re still required to keep a detailed list of repairs with the costs deducted so that you can show the tenant why they aren’t getting back their security deposit.

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Seek Resolution in Court, If Necessary

If there was enough damage done to the apartment, it may warrant a criminal case to be opened. Charges including criminal mischief and property damage can be filed, and the tenant who caused the damage can be punished for it. However, if the police department refuses to make an arrest, you can still follow up in civil court. You’ll have to file a lawsuit seeking compensation for the cost of the repairs for the damage. Find a good attorney for this part, as they can be the difference between you seeing the repair money or not. If the former tenants were having trouble paying rent prior to the damage, however, you may not recover much. Your outcome will depend a lot on certain case specifics.

How Can You Prevent This?

Unfortunately, there’s not a lot that landlords can do to safeguard themselves. One way that some property owners help incentivize tenants leaving the premises without damaging it after an eviction or after a lease expires is to offer cash back for turning in the keys. This can encourage tenants struggling financially to duck out without causing damage, while getting a little bit of money to float themselves. It might not be the most ideal situation, but it can be beneficial in the long run if it prevents you from having to deal with expensive repairs and renovations.

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Getting Help from a Property Management Company in Chicago

If you’re having trouble with tenants or managing your properties, it can be very helpful to work with a property management company. At Lofty, we’re dedicated to helping investment property owners in Chicago take care of everything at their properties, from finding tenants to scheduling maintenance to, when necessary, dealing with damage and tenants who destroyed property. We make things easier for you so that you can live the life you deserve, rather than spending all of your time on paperwork and phone calls. To find out about how we can take some of the work off of your plate, contact us anytime.

Wondering if a switch might be right for you? Give us a shout and learn more.

SCHEDULE A CHAT

or call

(844) 355-6389

All About Section 8: A Guide for Owners and Renters in Chicago

All About Section 8: A Guide for Owners and Renters in Chicago

By | Property Management

Whether you’re a property owner in Chicago or someone looking for an apartment, chances are you’ve heard of Section 8, also known as Housing Choice Vouchers or HCV. The program exists to allow low-income families find quality housing within Chicago’s private market, using federal funds provided by the U.S. Department of Housing and Urban Development (HUD). Through the program, the Chicago Housing Authority pays a portion of eligible families’ rent directly to the landlord. There is a waiting list to receive these vouchers, and names are selected from the waiting list randomly using a lottery service.

How Section 8 Apartments Are Rented

In Chicago, Section 8 tenants apply to apartments the same way any other tenant would—through the landlord’s standard application process. If they are approved by the landlord, a CHA representative will inspect the property to ensure that the unit meets basic housing quality standards.

Then, the tenant will sign the landlord’s lease and pay a predetermined portion of the rent, which is typically at least 30 percent of the family’s adjusted income. To cover the rest of the rent, the landlord enters a separate agreement with the CHA, in which the CHA agrees to pay for the balance of the rent, directly to the landlord.

In Cook County (so, in all of Chicago), landlords may not refuse to accept Section 8 tenants, as “Source of Income” is included in the Illinois Fair Housing Law’s protected classes. This resolution took effect in 2013 and was meant to encourage economically disadvantaged citizens to move toward the suburbs and decrease high concentrations of poverty-stricken areas within the city.

Landlords, can, however, reject applicants based on factors not related to their Section 8 status. For instance, if background checks or bill payment history are not up to snuff, or previous landlords cite problems with the tenant including property damage or problems with other tenants, or breaking lease terms, these can all be factors that contribute to a landlord rejection a Section 8 applicant.

All About Section 8: A Guide for Owners and Renters in Chicago

Questions Owners Might Have About the Section 8 Program

As an investment property owner in Chicago, you might have some questions about how the Section 8 housing program affects your properties:

  • How can I list my units for Section 8 renters?  Start by contacting the housing authority. They will have to approve both you as a landlord and your properties, and your units will need to be inspected. After that, you’ll be able to list your properties for those who need to rent affordable housing.
  • How much rent can I charge? You can set the rental price to be whatever you want, but it must be reasonably priced compared to your other units. If the rent is too high, you may be required to lower it to meet the needs of lower-income renters.
  • What if I have problems with my tenant? Dealing with problem tenants who are Section 8 renters will be the same as dealing with any other tenant. Unpaid rent, excessive damage, or other issues will have to follow city regulations up to and including eviction.
How Section 8 Apartments Are Rented

Answers for Tenants Using HUD Vouchers

If you’re a renter in Chicago wondering about how to qualify for and rent a Section 8 apartment, you’ll have to apply at your local housing agency. The amount you pay for rent will depend on your income and family size. Unfortunately, the waiting list for receiving Section 8 assistance may prevent you from being chosen for eligible housing immediately. However, once you are accepted, you will be able to rent in any area that has Section 8 apartments available.

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Getting Started with Section 8 Renting

If you want to start offering your properties as Section 8 units, your property management company can help. At Lofty, our goal is helping landlords achieve the best returns on their investment property, and we’ll help you work toward your goals, no matter what they are. As a property management company in Chicago, we have experience making sure that landlords are prepared for whatever might come their way, and we’ll help you get your apartments set up to pass inspection for Section 8 rentals, should you so desire.

We believe that investment property owners shouldn’t have to spend all of their time working on their properties, and we do everything we can to make sure that you live the life you deserve while being a landlord in Chicago. To learn more about all we can do for you, contact us anytime.

Wondering if a switch might be right for you? Give us a shout and learn more.

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long term leases in chicago

Why to Consider Offering Long-Term Leases in Chicago

By | Leasing

If you own rental properties in a big city like Chicago, you know that sometimes, you’ll work with tenants who are looking to stay put for a few years, and in an effort to reduce some stress on themselves will request a longer-term lease than is standard. Instead of leasing for one year, these tenants may request to sign two, three, or even five-year leases to avoid having to move. While the initial idea may not sound so great to you—how will you earn money on the changing rental market if you’re locked into a certain rental rate for a few years—it can be very beneficial to offer extended leases to tenants. As a property management company in Chicago, we at Lofty understand the hesitance of some owners and landlords to committing to longer leases than one year. It’s important to first have your renters sign a one-year lease, and after they have established that they’re trustworthy tenants, you can consider a longer lease. We want to make sure our clients get the most out of their investments, and for that reason, we’re sharing some reasons you should consider offering long-term leases to reliable renters.

1) Guaranteed Income

Perhaps the biggest benefit of offering longer term leases to tenants is the guarantee that you’ll have rented units with guaranteed cash flow for the duration of those leases. Instead of having to worry about finding a new tenant after one year, you can relax a bit and enjoy the steady influx of profits instead of worrying about creating new listing ads, screening new tenants, preparing the rentals for new tenants, and everything else related to tenants moving in and out every year. Decreasing the amount of time you have to spend on all of that not only saves you that time (obviously), but it has the added benefit of ensuring that you won’t have to deal with any vacancies during that time. If you’re worried about signing a tenant onto a rental rate that may have you earning less profit in their second or third lease year, just imagine what the cost is of having an empty unit for a month or longer every time a tenant moves out. Letting tenants sign two year leases is the perfect happy medium—they get two years of calm comfort, knowing they’re locked into a rental rate and won’t have to move, and you get two years of steady income without the worry that the market will change so much that you’ll be losing money on their rental rate.

2) Less Heavy Maintenance Related to Turnover

Another benefit of offering longer term leases is that it can reduce the amount of moving-related maintenance that you have to do. For instance, if you are required by law to repaint every time a tenant moves out, and you have tenants moving out every single year, you’re spending a lot of money on paint (and painters, if you’re not doing the job yourself). Now add on all of the other maintenance and cleaning that you have to do when tenants leave—imagine doing all of that work less frequently. Even if you’re working with a property management company that takes care of all the work that needs to be done, simply not having to do so is still the easier and more convenient choice. When tenants stay in your properties longer, you get the benefit of needing to do less work on your buildings.

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3) You Can Focus On Other Investments

When you’ve freed up the time that you would spend writing new listing ads, showing the units, and screening tenants, you can use that time to work on other investments.

With the steady cash flow from long-term leases and the time to look at other properties, you may find your investment property portfolio growing much faster than you thought it would. This can lead to even more profits and opportunity to invest in other Chicago properties. Growing your own business is a huge benefit of offering long term leases. The two may not sound like they are related on the surface, but it tends to have a domino effect.

4) Better Tenants Who Are More Trustworthy

Finally, offering long term leases tends to attract trustworthy tenants. People who are more destructive or disrespectful to rental properties typically look for shorter term leases so that at the end of their time, they can cut and run without any adverse effects. If you’ve got a prospective tenant asking to sign a contract for multiple years, however, they’re indicating that they’ve got a reason to want to stick around for a while. Whether it’s a locked-in rate or even just a great location for them, people who rent for a long time tend to view the property as something they should treat well. In general, tenants who stay in one place for many years may be more trustworthy and cause less damage than those who are looking for shorter term leases.

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How to Know What’s Right for Your Properties

If you’re not sure if offering long term leases is right for you, working with a property management company in Chicago can help. At Lofty, our goal is to make sure that our clients are getting the most return on their investments so that they can live the life they deserve, and we can help you figure out the best ways to market, rent, and maintain your Chicago rentals. To learn more about all we can do for you, contact us anytime. 

Wondering if a switch might be right for you? Give us a shout and learn more.

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(844) 355-6389

Things to Include in Your Chicago Rental Ads

5 Things to Include in Your Chicago Rental Ads to Edge Out Competition

By | Leasing

When you own investment properties in Chicago and are on the hunt for the best tenants to rent to, it’s important to post great ads to entice potential renters. Standing out against your competitors’ ads is easier than you might think—-it comes down to including five things that show to tenants that you’re the one they should be renting from and not anyone else. As a property management company in Chicago, we at Lofty know that some ads will be more successful than others, and we strive to help our clients draw in the best renters possible. Follow these tips to edge out your competition and find the best people to rent to.

5) A Headline that Avoids All Cliches

When you scan through rental listings, you likely see the same headlines over and over, with emphasis placed on the same key phrases—”Great location,” “Going fast,” “Recently rehabbed,” etc. While these help renters distinguish run of the mill places, they’re a bit empty and can be a lot stronger to catch someone’s eye. Instead of simply noting where the rental is and that it might be in a popular neighborhood, point out things that are great about the property itself. Features like hardwood floors, in-unit laundry, or a dishwasher are all points to note about properties that can draw in interested renters. That’s because not all of the rentals in Chicago have these features, and for many tenants, higher end amenities are on their “must have” lists. Include these phrases in your listings and you may find that you get more phone calls about seeing the place.

Things to Include in Your Chicago Rental Ads

4) Staging

Too often, rental listings include photos of rental properties that are clearly still being lived in. While that’s okay, if absolutely necessary, it’s much more appealing to a renter to see what the apartment looks like at its best. If you’re really trying to get your properties rented quickly and to great tenants, one way to entice them is to consider staging the units so that the photos you use in listings look fantastic. Staging may involve purchasing temporary furniture that you can keep in storage (or use for staging other properties), but it makes the apartment look like something aspirational, rather than showing off some other tenant’s old couch and cluttered bedroom. Making your property look extremely well maintained is a great way to get people interested—especially when you think about all of the other properties being listed with dim photos that look like they were taken on a last-minute basis.

3) Outdoor Photos

Another tipping point for renters is being able to envision what their new neighborhoods will look like. Will they live on a tree-lined side street or a bustling intersection? Of course, not every tenant will want one or the other, so posting photos of what the outside of the property looks like as well as its immediate surrounding area can help people decide whether it’s what they are looking for. Many investment property owners think it’s enough to just post photos of their properties’ interiors, but this can cause you to waste a lot of time showing units in busy neighborhoods to tenants who ultimately want peace and quiet, or showing units on a quiet street filled with families and children to people who want to be closest to the latest nightlife openings.

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2) Selling Points

Thinking back to the headline, if you include features of your properties that other property owners in Chicago aren’t offering, you may find that more and more people are interested in renting from you. For example, utilities being included in the rent is something that people will jump at the chance to have, as it cuts down the amount of bills they have to organize every month.

Permit parking or a covered lot are also great selling points, particularly in Chicago where parking is often at a premium. Include the features that tipped you to purchase the building in the first place, as those same features will appeal to renters.

1) A Call to Action

Finally—and this seems almost too simple to include as a tip—it’s important to include a call for your potential renters to get in touch with you. Too many rental ads simply list the facts: cross streets, price, and a bullet list of amenities. If you’re trying to get a property rented fast, make it easier for your potential tenants. Include a call to action at the end of your listing such as when to call, who to ask for, or when showings will take place. Phrases like “Stop by Thursday from 2 p.m. to 4 p.m. to see this unbeatable apartment,” or “Ask for Tony when you call to schedule your showing” can help tenants feel like if they don’t do so, they may miss out on your rentals.

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Getting Help With Your Listings

As an investment property owner, you’ve probably got a to-do list a mile long. At Lofty, we understand that things get pushed off all the time, and when you’re on a time crunch it’s easy to cut corners. As a property management company in Chicago, we want to help you. We’ll help you write the most effective ads possible for your listings, and we’ll also help you screen tenants. After your new renters move in, we can take care of maintenance requests, tracking down rent, and so much more. At Lofty, we strive to get rid of your busy work so that you can live the life you deserve. To learn more about all we can do for you, contact us anytime.

Wondering if a switch might be right for you? Give us a shout and learn more.

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how to prevent mold in my chicago apartment

What You Should Know About Finding Mold in Chicago Investment Properties

By | Property Management

As an investment property owner in Chicago, you’ve likely come across a deal at least once in your career that sounded great at first, only to turn into a mess after you found out about electrical problems, a shaky, non-level foundation, or mold within the property. Whether you saw the sale through or walked away, chances are you learned some lessons about damage levels or other issues in properties that make your investment worth it, as well as when you should throw in the towel.

When it comes to mold in properties, it can be an insidious problem, and one that is difficult to “diagnose” and solve, but in the long run, making sure your property is mold-free can save you a lot of trouble. As a property management company in Chicago, we at Lofty understand that mold can be a frustrating issue to deal with in investment properties, whether you’re negotiating a sale or you’ve already purchased a building. For that reason, we’ve compiled a list of aspects to consider when purchasing a property that has any mold–what you need to know, what’s fixable and how to go about doing so, and when you should walk away from a sale.

What Is Household Mold, How Does it Grow in Chicago Investment Properties, and How Can You Prevent It?

Before you get worked up and nervous, it’s important for us to point out that while no one wants to hear that their property has mold in it, it’s not the end of the line for your building. In other words, finding mold doesn’t mean you’ll have to level the building and start from scratch to truly get rid of it.

Mold, if you don’t already know, is a simple microscopic organism that exists everywhere— they’re required for the breakdown of organic matter, and they help recycle nutrients back into the environment. Great when it’s outdoors (except for those of you lucky ones with seasonal allergies!), but not great at all when it’s indoors.

Molds reproduce extremely quickly, which is why managing and getting rid of it can be a difficult job. The spores are miniscule, and unfortunately, can grow on just about any surface, which makes homes and interiors the perfect spot for them—they can grow on wood, paper, carpet, dust, insulation, fabrics, and near windows, just to name a few spots.

Mold doesn’t mean you’ve got a dirty building, though—many spores are invisible to the naked eye, and you’d never notice if your tenants or any pets are tracking them in from outside. However, they can grow and take hold of a building before you know it.

Some of the health problems it can cause include:

  • Allergy-like symptoms, such as sneezing, a runny nose, itchy and red eyes, and skin rashes.
  • Asthma attacks
  • Throat and lung irritation

Being exposed to mold most often causes a reaction that’s similar to the feeling of being sick with a cold, so it’s important to make sure you do everything you can to prevent it spreading.

Mold Prevention

The best thing you can do prevent mold within your properties is to make sure that moisture is controlled. Respond to any requests of water damage or broken windows promptly, as well as any basement leaking or other issues that could cause mold growth, like a leaking roof. Make sure your buildings are well-ventilated as well, so that moisture that does accumulate can evaporate.

What to Do If You Find Mold in a Chicago Investment Property

What to Do If You Find Mold in a Chicago Investment Property

If you or a tenant finds mold on the premises of one of your buildings, you’ll need to work with mold remediation companies, and even possibly the Environmental Protection Agency (EPA) to determine the best course of action. Discuss with your property management company when to bring in mold cleanup contractors, as they’re likely already working with reputable businesses in your area.

As a landlord, you’re required to ensure that your rentals are habitable, which means that unless the cause of the mold is tenant behavior, you’ll be responsible for getting rid of it at your own cost.

To find out whether there is mold in an apartment building or other investment property you are considering, inspectors can conduct an assessment, and there are also do-it-yourself mold testing kits available. Depending on the severity of the mold’s takeover, repairs can be done at an affordable rate. However, if you’ve yet to purchase the property, how can you know if it’s worth spending the money to repair mold issues, or if you should just abandon the sale?

Should You Walk Away from Purchasing Investment Property in Chicago that has Mold?

One way you can safeguard yourself when negotiating a deal on a property that’s been found to have mold is to ask for contingencies to be added to your written offer. These contingencies allow you to walk away from the sale if major problems are found—or, alternatively. Purchase at a reduced price or require the seller to cover the repairs.

If you find visible mold, more extensive testing should be done to find the moisture source, seeking out where the problem truly lies. While mold can be fixed, the root of the issue can be an indication that much more expensive repairs will be necessary. For instance, poor drainage, roof or foundation problems, faulty plumbing, and flooding damage can all be very expensive to mediate and repair.

Inspectors will be able to determine the extent of any mold damage, as well as what kind of mold is within the property. From there, you can work with your property management company to determine what the relative cost would be to repair the associated issues.

Whether you stay the course or walk away will come down to your own preferences as well as whether you see value in a property even with required maintenance costs added to the buying price. Your Chicago property management company will be able to offer some insight as well, based on previous experience with repairs related to mold problems.

If you do decide to walk away from a specific property, worry not—your property managers will be able to steer you toward a comparable, or perhaps even better, property investment opportunity.

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Need More Advice?

Whether you’re dealing with mold issues in a property you already own, or you’re considering purchasing investment property and you just learned that there are mold issues to be dealt with, a property management company will be able to lend a hand. At Lofty, our goal is to help property investors make the best decisions for their business, as well as take care of the issues that are pressing with potential or current investments. Maybe you don’t have the time to schedule all of the maintenance associated with mold remediation, or perhaps you don’t live in the area and can’t be on site when contractors are there. Whatever the case may be, we’ll take care of everything so that you can do other important work and live the life you deserve.

For more information about how Lofty can help you with your Chicago investment properties and beyond, contact us today.

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How to Spot Up-and-Coming Chicago Neighborhoods to Purchase Investment Properties In

How to Spot Up-and-Coming Chicago Neighborhoods to Purchase Investment Properties In

By | Real Estate Investment

The trick to turning the biggest profits on investment properties is, like many other investments, buy low and sell high. In other words, find apartment buildings and other properties in neighborhoods that are currently attracting tenants enough to make the investment worthwhile, but perhaps isn’t SO popular yet that the property is too costly. Spotting these up-and-coming neighborhoods can feel a bit like a gamble, but when you know what to look for in neighborhoods that have great properties but not a lot of draw, it’s easier to get a feel for what’s to come. As a property management company in Chicago, we at Lofty are dedicated to helping property investors find the best investments. Here’s our guide for helping you determine which neighborhoods show promise.

Check Out What Businesses Are Moving In

If empty storefronts have plagued an area, but more and more businesses are beginning to sign leases there, it can be a sign of what’s to come. A rapid increase of restaurants or brewpubs, coffee shops, bars, boutiques, and more can be an indication that a neighborhood is on the rise. Likewise, if more chain offerings move in—think places like Starbucks or Target—that can also bring more people to an area. People enjoy living close to a variety of businesses, and the busier a neighborhood gets, the more popular it becomes.

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Take a Look at the Transportation Offerings

If a train station or multiple public transportation stops are nearby a lot of buildings, it can be beneficial to look at those buildings as potential investments.

Many city dwellers rely on public transportation and will seek out housing that is nearest their most-used train or bus lines. If the neighborhood has a lot of public transit options and a lot of new businesses are moving in, this can be a sign that it’s time to buy.

Find Out if Any Large Companies Are Setting Up Camp There

Another thing that can bring a lot of people to an area of the city is when a big company, like Google, for instance, announced they’ll be opening an office there. Employees look for nearby housing, and that’s where your investment properties will come in handy for them. Take a look at news about businesses moving in, and maybe you’ll find some invaluable information.

Research the Average “DOM” or Days on Market Rate for Properties

In tough neighborhoods, when properties sell, they may sit on the market for several months. As those neighborhoods heat up, however, those properties sell faster and faster. This is a huge indication of how an area is doing. Check with real estate agents and your property management company in Chicago to learn about the trends in various neighborhoods in the city. Look for declining DOM rates—the faster properties are selling, the easier of a time you’ll have renting these properties out (and the higher demand means you’ll be able to price your rentals higher, as well).

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Look at the Neighborhood’s Demographics

Up-and-coming neighborhoods in many cities, but especially Chicago, are known for having a high concentration of “creative-type” residents. Because that line of work isn’t known for its fat paychecks (usually), people who rely on art, music, and similar livelihoods tend to find neighborhoods with relatively low rent. However, because these groups of people tend to have a following of people who want to be where the “cool” things are, those areas tend to increase in popularity, leading to increases in rent. Then, the whole cycle starts over. For instance, think of Wicker Park in Chicago about 15 years ago, or Logan Square five years ago. Both neighborhoods were the cheap, hip places to live, and nowadays, Wicker Park is home to booming businesses and hundreds of families, while Logan Square is currently seeing rent hikes and new restaurant openings on a near-weekly basis. Where will the next hot spot be?

Investigate City Improvement Plans

Look to city plans to see where people might gravitate to in a year or two. Are new parks being constructed? Schools? Trails? Amenities that people enjoy being near will cause an increase in popularity in an area, so try and check to see if the city has anything planned in the neighborhoods you’re looking to buy in. For instance, the creation of the 606 elevated trail is leading to an increase in growth on the blocks directly surrounding it.

Proximity to Other Popular Areas

Finally, look at what’s popular now, then look at the areas surrounding it. Where Wicker Park was popular, now it’s neighbors to the west (Bucktown and Logan Square) are heating up. Logan Square is pricing some residents out, who are now flocking to places like Humboldt Park, Avondale, and Hermosa. Take

Need Help With Your Investments?

As a property management company in Chicago, we at Lofty are dedicated to helping people make the best investments. That means providing sound advice on where to buy and what’s heating up, as well as helping you get the best returns on your investment properties in Chicago. We’re a full service property management company, and we’re ready to help you take care of all the minutiae related to owning investment properties, so that you can live the life you deserve rather than working constantly. To learn more about any of our services, contact us anytime!

Wondering if a switch might be right for you? Give us a shout and learn more.

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(844) 355-6389

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5 Most Helpful Aspects of Using a Chicago Property Management Company

By | Property Management

Owning investment property in Chicago is an exciting and busy adventure—sometimes too busy. From making sure your units aren’t vacant for too long between tenants to finding great tenants to occupy them, scheduling regular maintenance, collecting rent checks, performing upgrades and everything else, it’s easy to let owning rental properties become your full time job. The problem is, you likely didn’t get into investment properties so that you could work more. You probably got into it to earn some extra money in an interesting and lucrative way. Thankfully, you’re not stuck working overtime every week—many investment property owners utilize help from Chicago property management companies to avoid getting too tied up in work. Property managers can take a lot of the work off of your plate, of course, but as far as what they’re best at, we’ve put together a list of the five most helpful aspects of using a property management company in Chicago.

5) Finding and Keeping Better Tenants  

From shaping your ads to attract the right kind of renters, to interviewing applicants, running background checks, and collecting security deposits and rents, just the process of getting someone into your rentals can be a lot of pressure. Once they’re in there, there’s the work done to keep them happy and renewing their leases. Finding great tenants can be a hectic and chaotic process, but when you’re working with a Chicago property management company, they can take care of everything. Think about all of the time you spend fielding calls and emails from interested potential renters—just that on its own is a big job. Now, imagine not having to deal with any of that. Property management companies help investors find (and keep) the best tenants. Once people rent out your properties, your property managers will be able to track down rent to ensure you keep getting paid, and they can also mitigate issues with late or unpaid rent. Some property owners say that everything tenant- and rent- related, on its own, can be the reason to get a property manager.

 

4) Assistance With Maintenance

The next area that property management companies in Chicago excel in is maintenance and help with everything associated with the upkeep of your properties. Right now, if a tenant calls you in the middle of the night with an apartment emergency, you have to get out of bed and start making phone calls, trying to find a contractor who can help with that emergency at that hour. What’s worse, you may not even be able to find the solution at that hour. With a property manager, when an emergency arises, they’re ready to go. Property managers have a list of vetted, insured contractors like plumbers and HVAC specialists who can be on the job at the drop of a hat—and you won’t need to be there to let the maintenance worker in!

Imagine not having to worry about what you’d do if a tenant called you about a shattered front window or if tenant’s basement flooded during a springtime storm—because your property manager would already have it covered. That weight off your shoulders can be a lifesaver.

3) Increased Value of the Property

In a similar vein, when property managers have a hands-on approach to the way your property is maintained, they’ll be able to notice problems that you may not see until much later—when it will be costly to repair or upgrade. By noticing these upgrades before they’re absolutely necessary, you’ll be able to work gradually to improve your investment property, growing and increasing its earning potential year after year. Property management companies in Chicago have one common goal: to help their property owners succeed. When they’re working with your properties, they’ll be doing everything they can to help you see a better return on your investment.

 

2) Less Stress and More Freedom for the Owner

Property management companies do more than just take care of problems, though. Because they’re taking a lot of busy work off of owners’ plates, those owners then have a lot more freedom to do other things, like spend time with their families, put in work at their day jobs, or even seek out additional properties to invest in.

When you have more freedom to do what you want throughout the day because you’re not stuck at a desk making phone calls about late rent checks and leaky faucets, you’ll be amazed and what you can get done!

1) Fewer Problems with Renters

You already know that when you work with a property management company in Chicago, you’ll reap the benefits of them finding great tenants to rent your units. However, that’s not the only way that property managers help you with tenants. When there’s an issue with a tenant, such as unpaid rent over a couple months, you may find the process of fines and evictions to be unbelievably tedious and overwhelming, not to mention stressful for everyone involved. When you work with a property manager, though, your tenants know that they’re dealing with a business, not just one person anymore—they may be less likely to try and manipulate your emotions (who hasn’t heard a sob story about being able to pay rent “next week”?), and they may understand that they’ll get away with less when they’re dealing with a company. That’s not to say that you aren’t an authoritative owner, of course, just that it can be easier to resolve issues when it’s not just you fighting them. Additionally, if there are any complaints or problems from tenants, you won’t have to spend all of your time sorting through them—that’s part of how a property management company helps! They can step in and mediate the problem, so that you can get back to doing more important things.

Ready for Some Help With Your Investment Properties in Chicago?

If you’ve been feeling overwhelmed by the work associated with your rental properties, you’re not alone. Whether you’re new to the business or a seasoned vet, it’s not uncommon to need a helping hand with your investments. As a property management company in Chicago, we at Lofty strive to help all of our owners succeed, so that they can live the life they deserve. If you’ve been considering hiring a property management company for your rental units in Chicago, contact us anytime for more information about how we can make your job easier.

Speak with one of our experts to find out how we can supercharge your investment.

What to Know About Allowing Pets in Your Chicago Rental Properties

5 Most Important Things To Know About Allowing Pets in Your Chicago Rental Properties

By | Property Management

Owning investment properties in Chicago is, no doubt, a lucrative business. There’s never a shortage of tenants, neighborhoods shift in popularity ensuring there’s always somewhere that’s booming, and there are plenty of ways to attract more tenants if you do somehow find you’re in a slump. One way that many Chicago rental property owners boost interest in their units is by allowing their tenants to have pets. Cats and dogs are the most common pets for renters to have, but some have birds or small pets like ferrets and hamsters. While allowing your tenants to bring their furry (or feathered) companions into your property can help you find better and more reliable tenants, there are some precautions you may want to consider. As a Chicago property management company, our goal at Lofty is to make sure all of our property owners are well-prepared so that they can have the best experience being real estate investors. To us, that means providing them with the information they need to be the most profitable and secure within the business. Here are our most important tips about allowing pets in rental properties.

5) Make Sure Your Tenants Know Their Responsibilities

When you allow your tenants to bring Fluffy or Spot into your rentals, you’re opening a line of mutual trust—they trust that you’re going to be a good landlord, and in exchange, you’re trusting that their pets won’t wreck the place or become a nuisance. Be sure that your tenants are aware of their responsibilities. For instance, make sure they know their pets should be up to date on vaccinations and registered with the city (if applicable), and be sure to outline upkeep of common areas on the property (for example, let them know that not cleaning up after their dog outside may result in fines, or that their pets may not roam hallways unattended).  Outlining tenants’ responsibilities before a pet even enters the building is the best way to ensure that everyone stays happy. No surprises is a good thing!

4) Plan Ahead for Damage to the Units, Just in Case

Of course, even though every pet owner claims their pet won’t cause any damage at all, as a property owner, you know that’s rarely the case. Pets may have accidents, or their claws may grow out a bit too long at some point leading to scratched floors, or maybe, after 5 years of perfect behavior, a tenant’s dog gets bored and chews on your building’s cabinets.

Whatever the case may be, it’s important for you to plan ahead for this type of damage. There are a few ways to do this. First, many owners choose to charge a pet deposit. These can either be refundable or not, and help cover the cost of any damage that may be caused during your tenant’s stay. Another option is charging additional pet rent each month. This will generally work out to be roughly the same amount of money that you would charge for the pet deposit, but since it’s spread out over the course of the lease, it can be an easier cost for the tenant to shoulder. If you’re unsure of what to do to prepare for pet damage in your pet-friendly Chicago rentals, consult with your property management company—they’ll have plenty of experience and advice!  

3) Look Into Different Pet-Ownership Clauses on Your Insurance

When typical homeowners have pets, they may need to add insurance for their pets onto their policy to cover issues like dog bites. As a property owner, you’ll want to consult with your insurance company and your property managers to find out what you’ll need to do to make sure that you’re covered in the event that something happens on your property. Dog bite insurance claims are more common than you may think, so it’s essential to make sure that you’re prepared for problems (while being hopeful that those problems don’t arise, of course).

2) Have Your Leases Outline What Will Happen In the Event of a Problem or Emergency

While tenants who have pets tend to be more responsible and reliable, you’ll want to outline consequences if there are problems with their pets. For instance, if one of your tenants has an overly aggressive dogs that becomes a menace to other tenants, or gets in fights in the yard, you may not want to continue the rental relationship. It should be outlined in your lease agreements what will happen if there is a continual problem with a tenant and their pets. Ask your Chicago property management company how to properly phrase these concepts in your lease so that you can foster an amicable and agreeable lease agreement with your tenants. For example, outline a system of warnings.

1) Know What You’ll Do if Someone’s Pet Injures Someone

Your property managers will be able to better explain what you’ll need to plan out, but you will want to make sure you have a plan in case a tenant’s pet injures you or someone else on the property. Your insurance should cover any issues, however in the meantime, you’ll want to have a mediation plan set up just in case a problem ever occurs. Whether a dog bites someone through the fence or a cat scratches another tenant and that tenant ends up in the doctor’s office, you’ll want to have things covered.

 

Offering Your Pet-Friendly Rentals in Chicago

As a property investor in Chicago, you’ve likely heard all of the benefits of allowing your properties to be pet-friendly. If you’re interested in learning more about transitioning to allowing pet-friendly units, talk with a Chicago property manager today. At Lofty, our goal is making sure you succeed so that you can live the life you deserve—we’ll help you set up everything you need to ensure your properties and tenants are ready for man’s best friend. Contact us anytime to learn more about how we can help you achieve your property investing goals.

Speak with one of our experts to find out how we can supercharge your investment.

 

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